Real Estate Terms Cheat Sheet
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A

Absorption Cost – Total cost to lease or sell available space, including concessions.
Absorption Rate – Speed at which properties lease or sell in a market.
Acre – 43,560 square feet.
ADA Compliance – Accessibility requirements for individuals with disabilities.
Agricultural Zoning – Zoning specific to farming and agricultural uses.
Amortization – Loan repayment schedule including principal and interest.
Appraisal – Professional evaluation of a property’s market value.
Assemblage – Combining multiple parcels to create a larger, more valuable property.
As-Is Condition – Property sold with no repairs or warranties.
Asset Class – Type of property (industrial, retail, office, multifamily, land).

Balloon Payment – Large final loan payment due at the end of the term.
Base Rent – Minimum rent before additional charges (CAM/NNN).
BPO (Broker Price Opinion) – Broker’s informal estimate of value.
BOV (Broker Opinion of Value) – More detailed valuation for commercial properties.
Build-Out – Interior construction or finishing of a commercial space.
Build-to-Suit – Property built specifically for a tenant.

Buyer’s Agent – Agent representing the buyer’s interests.

CAM (Common Area Maintenance) – Tenant fees for shared spaces and upkeep.
Cap Rate – NOI ÷ Price — measures investment return.
Carve-Out Guarantee – Personal guarantee on non-recourse loans for bad acts.
CC&Rs – Rules governing a subdivision or community.
Certificate of Occupancy (CO) – Confirms property is safe for use.
Class A/B/C Properties – Commercial building quality categories.
Closing Costs – Fees associated with finalizing a transaction.

Co-Tenancy Clause – Allows retail tenants rent reductions if anchor tenants leave.
Cold Shell / Warm Shell – Level of interior finish delivered by a landlord.
Comparables (Comps) – Recent sales used to estimate value.
Conditional Use Permit (CUP) – Allows non-standard land uses.
Contingency – Condition required to complete a sale.
Conventional Loan – Standard mortgage not backed by government programs.

Debt Service Coverage Ratio (DSCR) – NOI ÷ Debt payments.
Deed – Legal document transferring ownership.
Deed of Trust – Similar to a mortgage, involving a trustee.
Depreciation – Tax deduction for wear and tear on investment property.
Drag-Along Rights – Allows majority owner to force a sale of minority interests.
Due Diligence – Inspections and investigations before closing.

Easement – Legal right to access or use another’s land.
Effective Rent – Rent after accounting for concessions or free rent.
Eminent Domain – Government right to take property for public use.
Encroachment – Structure extending beyond property boundaries.
Entitlements – Required government approvals for development.
Equity – Ownership interest after subtracting debt.
Escrow – Third-party holding funds and documents during transactions.

FAR (Floor Area Ratio) – Zoning metric for building size vs. lot size.
Fair Market Value (FMV) – Price a property would sell for under normal conditions.
Feasibility Study – Financial and practical assessment of a development.

Floodplain – Land with a high risk of flooding.
Foreclosure – Lender taking possession due to loan default.

Gross Lease – Landlord pays all operating expenses.
Gross Rent Multiplier (GRM) – Price ÷ Gross Rent.
Ground Lease – Tenant leases land and builds structure on it.

Highest and Best Use – Most profitable legal use for a property.
HOA (Homeowners Association) – Governing body for subdivisions/condos.
Home Inspection – Professional review of home systems and structure.

Impact Fees – Development fees for city infrastructure.
Ingress/Egress – Legal access into and out of a property.
Inspection – Evaluation of property condition.
Interest-Only Loan – Payments only cover interest for a period.
IRR (Internal Rate of Return) – Long-term investment performance measure.
Industrial Property – Warehousing, distribution, manufacturing facilities.

Joint Tenancy – Ownership where rights transfer to surviving owners upon death.

Key Money – Payment for securing a desirable commercial lease.

Land Survey – Detailed mapping of property boundaries and features.
Lease Abstract – Summary of key lease terms.
Leasehold Interest – Tenant’s right to use property for a specified time.
Leverage – Using borrowed funds to increase purchasing power.
Lien – Claim against property for unpaid debt.
Load Factor – Ratio of common area space to usable square footage.
Lot Line Adjustment – Official change to property boundaries.

Market Value – Current property value based on market conditions.
Mixed-Use Property – Combine residential, retail, office, or industrial uses.
MLS (Multiple Listing Service) – Property listing database for agents.
Monument Sign – Large freestanding sign used for commercial properties.

Net Lease (N, NN, NNN) – Tenant pays some or all operating expenses.
NOI (Net Operating Income) – Income after operating expenses.
Non-Recourse Loan – Borrower not personally liable (with exceptions).

Option Agreement – Right to buy property later at a set price.
Outlot / Outparcel – Standalone retail lot in front of shopping centers.
Owner’s Association – Governing body for shared land or facilities.

Parcel – Individual piece of land.
Percentage Lease – Retail lease with base rent + % of sales.
Perc Test – Test of soil drainage for septic systems.
Phase I Environmental Study – Review for contamination risks.
Plat / Plat Map – Official recorded map of property boundaries.
Pro Forma – Projected financials for investment property.
Punch List – Items to complete before final construction approval.

Qualified Buyer – Buyer who can demonstrate financial ability.
Quiet Enjoyment – Tenant’s right to use property without interference.

Real Estate Investment Trust (REIT) – Company investing in income-producing property.
Recourse Loan – Borrower personally liable for repayment.
Rent Roll – List of tenants, rents, and terms.
Rentable vs. Usable SF – Rentable includes shared space; usable is interior-only.
Right-of-Way – Legal passage for public or utility use.

Rural Land – Agricultural or recreational property outside city limits.

Sale-Leaseback – Owner sells property and leases it back from buyer.
Setback – Required distance between building and property line.
Site Plan – Drawing showing layout of buildings, parking, utilities.
Shell Condition (Warm/Cold) – Level of finished interior delivered.
Subordination Agreement – Establishes priority of liens or debts.
Survey – Boundary and feature mapping of property.

Takeout Loan – Long-term loan replacing a construction loan.
Tenant Improvement Allowance (TI/TIA) – Funds for commercial build-out. Title Commitment – Preliminary title report showing any issues.
Title Insurance – Protects against title defects.
Topography – Physical characteristics of land surface.
Triple Net Lease (NNN) – Tenant pays taxes, insurance, and CAM.
Turnkey Property – Property ready for use immediately.

Under Contract – Property has accepted offer and is pending closing.
Use Agreement – Document outlining allowable property uses.
Utilities Easement – Right for utility companies to access property.

Vacancy Rate – Percentage of unoccupied rental units.
Value-Add Property – Property that can increase value through improvements.
Variance – Permission to deviate from zoning laws.

Warehouse Property – Industrial property type used for storage/distribution.
Water Rights – Legal right to use adjacent water sources.
Wetlands – Environmentally protected land area.

Zoning – Local laws regulating land use.
Zoning Variance – Exception to zoning restrictions.